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There is no doubt many more 10's of billions of dollars in fiat associated with illegal activities.
Fun Fact: At least in the West, check any large random sample of paper currency and there will be traces of cocaine on much of it. Does anyone worry about that? No.
There is no doubt that trillions of dollars and fiat currency will be used for illegal activities but there is no evidence trail for fiat transaction but that is not the case with bitcoin, it is an evidence trail and every transaction every made is available for anyone to track and if you are holding coins that are marked as illegal then you might get into trouble in the future, right now no one cares about the coins we are receiving but that might not be the case in the future.